Correlation Between Engie Brasil and Cable One

Can any of the company-specific risk be diversified away by investing in both Engie Brasil and Cable One at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Engie Brasil and Cable One into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Engie Brasil Energia and Cable One, you can compare the effects of market volatilities on Engie Brasil and Cable One and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Engie Brasil with a short position of Cable One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Engie Brasil and Cable One.

Diversification Opportunities for Engie Brasil and Cable One

-0.78

Correlation Coefficient

Engie Brasil  Cable One

Pay attention - limited upside

The 3 months correlation between Engie and Cable is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Engie Brasil Energia and Cable One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cable One and Engie Brasil is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Engie Brasil Energia are associated (or correlated) with Cable One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cable One has no effect on the direction of Engie Brasil i.e., Engie Brasil and Cable One go up and down completely randomly.

Pair Corralation between Engie Brasil and Cable One

Assuming the 90 days trading horizon Engie Brasil Energia is expected to generate 0.39 times more return on investment than Cable One. However, Engie Brasil Energia is 2.6 times less risky than Cable One. It trades about 0.03 of its potential returns per unit of risk. Cable One is currently generating about -0.03 per unit of risk. If you would invest  3,273  in Engie Brasil Energia on September 23, 2024 and sell it today you would earn a total of  409.00  from holding Engie Brasil Energia or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	68.75%
Values	Daily Returns

Engie Brasil Energia  vs.  Cable One

Engie Brasil Energia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Engie Brasil Energia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cable One

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cable One are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cable One sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Engie Brasil and Cable One

The main advantage of trading using opposite Engie Brasil and Cable One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Engie Brasil position performs unexpectedly, Cable One can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cable One will offset losses from the drop in Cable One's long position.

The idea behind Engie Brasil Energia and Cable One pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.